Public Company Information:

PSE: GLO

Globe Telecom soared to new all-time high levels, with consolidated
service revenues reaching P62.9 billion as of the first half of 2017,
or 5% higher than the P59.9 billion reported in the same period of 2016.

Revenues posted record highs for two consecutive quarters this year
with the second quarter ending at P31.8 billion, outpacing the prior
quarter’s record-level revenues and the same quarter last year by 2%
and 6%, respectively. The robust performance remained broad-based with
both the mobile data and home broadband segments posting outstanding
results, spurred by the continuous expansion of the broadband customer
base, and the excellent market execution of the company’s
game-changing initiatives. This result was likewise boosted by Globe
Telecom’s reliable network that supports the enhanced digital
lifestyle of its customers.

Mobile revenues stood at P48.3 billion as of end-June 2017, up 5%
year-on-year, led by the sustained solid growth in mobile data. Both
Globe Prepaid and TM, the company’s mass-market brand,
registered 8% revenue growth from same period last year, while Globe
Postpaidposted a 1% increase year-on-year. Globe
Telecom’s mobile subscriber base reached 59.7 million for the first
semester of the year, down 3% from the 61.3 million subscribers
reported in the same period of 2016. The decline in the cumulative
mobile subscriber base was due to the change in reporting of the
company’s prepaid subscribers. Beginning the first quarter of 2017,
the company excluded in their reporting the prepaid subscribers who do
not reload within 90 days of the second expiry period, versus the
previous cut-off of 120 days.

On a product perspective, mobile data contributed about 42% of total
mobile revenues for first half of 2017, versus 39% a year ago. Mobile
data service revenues reached P20.3 billion as of end-June 2017, or
13% higher than the P18.0 billion reported in the same period last
year. This was due to the steady rise in smartphone penetration, which
increased to 67% for the period, and the growth in data usage. Mobile
data traffic for the period grew 85% from 151 petabytes (PB) in 2016
to 280 PB this year.

Despite the double-digit growth, the company believes the reported
increase in mobile data revenues is not representative of the true
growth of the business, due to the application of certain accounting
standards on bundled promotions. In particular, the Free Facebook
offer, which the company began to bundle in its lower denominated
prepaid promos in 2015 and subsequently ended in June 2016 for TM and
May 2017 for Globe Prepaid, mutes the performance of the mobile data
business due to the change in the assignment of revenues in the
different periods.

The Free Facebook offer was an initiative that allowed Globe to
transform its customers’ behavior and successfully allowed the company
to increase its mobile data traffic and improve its yields, leading to
the revenue levels we see today. It is for this reason that the
company believes it is appropriate to provide a normalized view to
show the true impact of the initiative and provide a more accurate
picture of the momentum of the mobile data business. On a normalized
basis, adjusting for the impact of the Free Facebook promotion, mobile
data revenues would have increased by 24% against the same period last year.

Meanwhile, Globe’s home broadband business continued its solid
growth year-on-year, delivering a total of P7.7 billion revenues as of
end-June this year, up a strong 8% from the same period last year.
This was mainly driven by the continued customer base expansion, which
now reached a total of 1.2 million as of the first half of 2017, with
fixed wireless growing by 22% year-on-year. With the company’s aim to
give its customers a better connected experience, Globe At Home
recently launched it’s new and improved Go BIG plans, which provide
bigger data allocations at affordable rates alongside fast and
reliable speeds. This only proves how Globe leads in broadband
adoption through the continuous deployment of its leading edge network
technology–targeting two million homes with reliable internet access
by 2020.

Complementing the growth in mobile and home broadband, Globe
Telecom’s corporate data business registered a 3% increase
year-on-year to P5.0 billion as of the first half of 2017, from the
P4.9 billion posted in the same period of 2016. The increasing demand
for data connectivity, managed service solutions, and cloud-based
services were the main drivers behind this revenue performance. This
resulted to growth in terms of customer base and circuit count, as
well as increased usage year-on-year.

Traditional fixed line voice revenues however, posted a decline of
5% from a year ago.

Notwithstanding the sustained record highs in terms of revenues and
EBITDA as of end-June this year, Globe Telecom’s net income was
weighed down by the impact of increased interest expenses,
depreciation charges and Globe Telecom’s share in equity losses and
spectrum amortization related to the SMC telco asset acquisition. Net
income as of the first half of 2017 dropped 10% to only P8.1 billion
from the P9.0 billion posted in the first half of 2016, as the charges
related to the SMC transaction were only reflected in Globe Telecom’s
financials starting the third quarter of 2016. Excluding the impact of
the SMC transaction, net income would have just declined by 4% at P8.7
billion versus the first half of 2016. Globe Telecom’s core net
income, which excludes the impact of non-recurring charges, and
foreign exchange and mark-to-market charges, likewise declined by 10%
from P8.8 billion a year ago.

“We are happy with our achievements in the first half of the year,
with record-breaking gross service revenues and EBITDA,” said Globe
President and CEO Ernest L. Cu. “This affirms our confidence in
delivering consistent business growth that is sustainable moving
forward, leveraging on our continued aggressive network upgrades,
customer-focused products and service offerings, as well as our
continued attention to cost management,” Mr. Cu added.

Globe spent around P27.5 billion in capital expenditures as of
end-June of 2017 to support the growing subscriber base and its demand
for data. Of the total capital expenditures spent this year, about 87%
was for the data service needs of its customers.